Energy Terms

Energy Terminology

Here you’ll find definitions to commonly-used terms in the energy space. Click the alphabet below to begin. Can’t find what you’re looking for? Our Customer Service Specialists are standing-by, so just click here to contact Customer Care or simply give us a call at 844.692.4372. We’re always there to help!

The actual reduction in annual peak load (measured in kilowatts) achieved by consumers that participate in a utility Demand Side Management (DSM) program. It reflects the real changes in the demand for electricity resulting from a utility DSM program that is in effect at the same time the(...)

A person joining two or more customers, other than municipalities and political subdivision corporations, into a single purchasing unit to negotiate the purchase of electricity from retail electric providers. Aggregators may not sell or take title to electricity. Retail electric providers are(...)

Necessary services that must be provided in the generation and delivery of electricity. As defined by the Federal Energy Regulatory Commission,they include: coordination and scheduling services (load following, energy imbalance service, control of transmission congestion); automatic generation(...)

The average revenue per kilowatt-hour of electricity sold by sector (residential, commercial, industrial, or other) and geographic area (State, Census division, and national) is calculated by dividing the total monthly revenue by the corresponding total monthly sales for each sector and(...)

The cost to the utility if it had generated or otherwise purchased the power. It is a benchmark price for energy services, used to compare resource alternatives. Avoided cost is the marginal long-term or short-term production cost that could be avoided by an alternative supply-side or(...)

A plant, usually housing high-efficiency steam-electric units, which is normally operated to take all or part of the minimum load of a system, and which consequently produces electricity at an essentially constant rate and runs continuously. These units are operated to maximize system(...)

The differential that exists between the future price for a given commodity and the Cash or Spot price for the same or related commodity. Basis may reflect different time periods, product forms, qualities or locations. Cash minus Futures equals Basis.

Organic non-fossil material of biological origin constituting a renewable energy source such as energy derived from plants. Alcohol fuels are produced from wood, sugarcane and corn. Firewood, crop residue and cattle dung can also be burned.

Is a standard unit of energy which is a common measure of heating value for different fuels. One Btu is equal to the amount of heat required to raise the temperature of one pound of liquid water by 1 degree Fahrenheit at its maximum density, which occurs at a temperature of 39.1 degrees Fahrenheit.

The maximum load that a generating unit, generating station, or other electrical apparatus can carry under specified conditions for a given period of time without exceeding approved limits of temperature and stress.

An element in a two-part pricing method used in capacity transactions (energy charge is the other element). The capacity charge, sometimes called Demand Charge, is assessed on the amount of capacity being purchased.

An electric generating technology in which electricity is produced from otherwise lost waste heat exiting from one or more gas (combustion) turbines. The exiting heat is routed to a conventional boiler or to a heat recovery steam generator for utilization by a steam turbine in the production(...)

An electric generating unit that consists of one or more combustion turbines and one or more boilers with a portion of the required energy input to the boiler(s) provided by the exhaust gas of the combustion turbine(s).

Price of fuels marketed on a contract basis covering a period of 1 or more years. Contract prices reflect market conditions at the time the contract was negotiated and therefore remain constant throughout the life of the contract or are adjusted through escalation clauses. Generally, contract(...)

An electric power system or combination of electric power systems to which a common automatic control scheme is applied in order to: (1) match, at all times, the power output of the generators within the electric power system(s) and capacity and energy purchased from entities outside the(...)

Rural electric cooperatives generate and/or purchase wholesale power, arrange for the transmission of that power, and then distribute the power to serve the demand of rural customers. Co-ops typically become involved in ancillary services such as energy conservation, load management and other(...)

The most common unit of measurement of natural gas volume. It is the amount of gas that can fit within a space one foot times one foot times one foot in volume. One cubic foot of pipeline-quality gas contains approximately 1,000 BTU.

Part of the monthly basic distribution charge to partially cover costs for billing, meter reading equipment, service line maintenance and equipment. This charge is the same no matter how much electricity you use.

A schedule prepared by a Scheduling Coordinator or the Independent System Operator before the beginning of a trading day. This schedule indicates the levels of generation and demand scheduled for each settlement period that trading day.

Financial instrument derived from a cash market commodity, futures contract or other financial instrument. Derivatives can be traded on regulated exchange market or over-the-counter. For example, futures contracts are derivatives of physical commodities, options on futures are derivatives of(...)

An arrangement that gives customers the choice of buying electricity from any supplier in the competitive market. Under direct access, customers could buy power from any generator and use the transmission and distribution network to transport the electricity.

The stripping off of one utility function from the others by selling (spinning-off) or in some other way changing the ownership of the assets related to that function. Stripping off is most commonly associated with spinning-off generation assets so they are no longer owned by the shareholders(...)

A statement of the electric rate and the terms and conditions governing its application, including attendant contract terms and conditions that have been accepted by a regulatory body with appropriate oversight authority.

Any person or state agency with a monopoly franchise (including any municipality) that sells electric energy to end-use customers.
End-Use The ultimate use to which energy service is put, such as water heating and air conditioning.

Actions that are taken to reduce or manage energy consumption in a cost-effective and efficient manner. Methods of reducing energy include using insulation, increasing energy efficiency and changing patterns of use.

The use of energy as a source of heat or power or as an input in the manufacturing process. Energy consumption determined by multiplying the demand by the time period over which the energy was used. The kilowatt-hour is the typical unit of measure for energy consumption.

Refers to programs that are aimed at reducing the energy used by specific end-use devices and systems, typically without affecting the services provided. These programs reduce overall electricity consumption (reported in megawatt or kilowatt hours), often without explicit consideration for the(...)

The primary source that provides the power that is converted to electricity through chemical, mechanical, or other means. Energy sources include coal, petroleum and petroleum products, gas, water, uranium, wind, sunlight, geothermal, and other sources.

The Energy Policy Act of 1992 addresses a wide variety of energy issues. The legislation creates a new class of power generators, exempt wholesale generators, that are exempt from the provisions of the Public Holding Company Act of 1935 and grants the authority to the Federal Energy Regulatory(...)

The Federal Energy Regulatory Commission regulates the price, terms and conditions of natural gas and electricity sold in interstate commerce and regulates the price, terms and conditions of all wholesale transactions. FERC is the federal counterpart to state utility regulatory commissions.

The number of complete alternations or cycles per second of an alternating current. It is measured in Hertz. The standard frequency in the US is 60 Hz. However, in some other countries the standard is 50 Hz.

The chain of activities involved in transforming energy into forms more convenient for society. This chain may include some or all of the following: fuel exploration, extraction, preparation, transportation, conversion to electricity, distribution and waste disposal.

These costs include the fuel used in the production of steam or driving another prime mover for the generation of electricity. Other associated expenses include unloading the shipped fuel and all handling of the fuel up to the point where it enters the first bunker, hopper, bucket, tank, or(...)

Arrangement through a contract for the delivery of a commodity at a future time and at a price specified at the time of purchase. The price is based on an auction or market basis. This is a standardized, exchange-traded, and government regulated hedging mechanism.

A plant in which the prime mover is a gas turbine. A gas turbine consists typically of an axial-ow air compressor, one or more combustion chambers, where liquid or gaseous fuel is burned and the hot gases are passed to the turbine and where the hot gases expand to drive the generator and are(...)

Energy from the internal heat of the Earth, which may be residual heat, friction heat, or a result of radioactive decay. The heat is found in rocks and fluids at various depths and can be extracted by drilling or pumping.

A plant in which the prime mover is a steam turbine. The turbine is driven either by steam produced from hot water or by natural steam that derives its energy from heat found in rocks or fluids at various depths beneath the surface of the earth. Drilling and/or pumping extract the energy.

The entity that oversees the delivery of electricity over the grid to the customer, while assuring consistently high levels of reliability, and public and worker safety. The grid operator potentially could be independent of the utilities and suppliers.

An organic chemical compound of hydrogen and carbon in the gaseous, liquid, or solid phase. The molecular structure of hydrocarbon compounds varies from the simplest (methane, a constituent of natural gas) to the very heavy and very complex. Natural sources of hydrocarbons are the by-products(...)

Wholesale electricity producers (other than qualifying facilities under the Public Utilities Regulatory Policies Act of 1978) that are unaffiliated with franchised utilities in the area in which the independent power producers are selling power and that lack significant marketing power. Unlike(...)

A neutral, independent, and (typically non-profit) organization with no financial interest in generating facilities that administers the operation and use of the transmission system. ISOs exercise final authority over the dispatch of generation to preserve reliability and facilitate(...)

A plant in which the prime mover is an internal combustion engine. An internal combustion engine has one or more cylinders in which the process of combustion takes place, converting energy released from the rapid burning of a fuel-air mixture into mechanical energy. Diesel or gas-red engines(...)

A class of utility whose stock is publicly traded and which is organized as a tax-paying business, usually financed by the sale of securities in the capital market. It is regulated and authorized to achieve an allowed rate of return.

A unit of apparent power equal to 1000 volt amperes. Here, apparent power is in contrast to real power. On ac systems the voltage and current will not be in phase if reactive power is being transmitted. Usually abbreviated kVA or KVA.

The ratio of average energy demand to maximum demand for a time period, such as one year, one month, or one hour. An end user with a high load factor uses energy at a consistently higher level year-round than an end user who may use energy specifically for heating or cooling.

A business entity that obtains its primary revenues from the operations of a local retail gas distribution system and operates no transportation system other than connections within its own system or to the system of another company. Most often, an LDC is a utility.

When one company owns a sufficiently large percentage of generation, transmission, or distribution capabilities in a region to allow it to influence the price of electricity by forcing the purchase of its own power.

Electric service prices determined in an open market system of supply and demand under which the price is set solely by agreement as to what a buyer will pay and a seller will accept. Such prices could recover less or more than full costs, depending upon what the buyer and seller see as their(...)

A mixture of hydrocarbon compounds and small quantities of various non-hydrocarbons existing in the gaseous phase or in solution with crude oil in porous rock formations at reservoir conditions. The principal hydrocarbons normally contained in the mixture are methane, ethane, propane, butane,(...)

Gross generation minus plant use from all electric utility owned plants. The energy required for pumping at a pumped-storage plant is regarded as plant use and must be deducted from the gross generation.

The sum of two or more peak loads on individual systems that do not occur in the same time interval. Meaningful only when considering loads within a limited period of time, such as a day, week, month, a heating or cooling season, and usually for not more than 1 year.

Point-to-point transmission service that is reserved and/or scheduled on an as-available basis and is subject to interruption. Non-firm Transmission Service is available on a stand-alone basis as either Hourly Non-firm Transmission Service or Short-Term Non-firm Transmission Service.

A corporation, person, agency, authority, or other legal entity or instrumentality that owns electric generating capacity and is not an electric utility. Non-utility power producers include qualifying co-generators, qualifying small power producers, and other non-utility generators (including(...)

Energy from the inner core or nucleus of the atom, as opposed to energy released in chemical processes, which derives from the electrons surrounding the nuclei. Nuclear fusion is the release of thermonuclear energy by the conversion of hydrogen nuclei to helium nuclei, in a continuing reaction(...)

Fissionable materials that have been enriched to such a composition that, when placed in a nuclear reactor, will support a self-sustaining fission chain reaction, producing heat in a controlled manner for process use.

OASIS is a real-time information-sharing system that enables all buyers and sellers of electricity to access the transmission costs for all other buyers and sellers. This system is designed to ensure that transmission owners and their affiliates do not have an unfair advantage in using(...)

Capacity of generating equipment normally reserved for operation during the hours of highest daily, weekly, or seasonal loads. Some generating equipment may be operated at certain times as peaking capacity and at other times to serve loads on an around-the-clock basis.

Under performance-based ratemaking, rates for utility service would no longer be based on cost-of-service, but instead on performance standards and market indices. PBR allows a utility greater flexibility to manage the costs of its electric system and to price its power at competitive levels(...)

Used to directly convert solar radiation into electricity. Materials called semiconductors, usually made from pure silicon, transfer light energy (photons) into electrical energy in a process known as the photoelectric effect.

A facility at which are located prime movers, electric generators, and auxiliary equipment for converting mechanical, chemical, and/or nuclear
energy into electric energy. A plant may contain more than one type of prime mover. Electric utility plants exclude facilities that satisfy the(...)

A competitive company that operates and maintains existing generation plants. The company may own the generation plants or may interact with the short-term market for electric power on behalf of plant owners.

Business entities engaged in buying, selling, and marketing electricity. Power marketers do not usually own generating or transmission facilities. Power marketers, as opposed to brokers, take ownership of the electricity and are involved in interstate trade. These entities file with the(...)

The federal act outlines requirements for state utility commissions, electric utilities, independent power producers and certain federal regulatory agencies to encourage the use of alternative energy sources in the generation of electric power. The act created a market for independent power(...)

A plant that usually generates electric energy during peak-load periods by using water previously pumped into an elevated storage reservoir during off-peak periods when excess generating capacity is available to do so. When additional generating capacity is needed, the water can be released(...)

A co generation or small power production facility that meets certain ownership, operating, and efficiency criteria established by the Federal Energy Regulatory Commission (FERC) pursuant to the Public Utility Regulatory Policies Act (PURPA).

The value of property upon which a utility is permitted to earn a specified rate of return as established by a regulatory authority. The rate base generally represents the value of property used by the utility in providing service and may be calculated by any one or a combination of the(...)

Residential Customer Equivalent based on the Inception of the contract term multiplied by the Annual Historical Usage (HU) as an example: if the customer has a 2 year contract we calculate as follows ( Contract End Date - Contract Start)/30 Days Average Month/12 Months Per Year Annual HU. For(...)

The original pipeline capacity holder of rm space on a pipeline for which reservation (demand) charges are paid. This party may release capacity for others shippers (Replacement Shippers) to use through the Capacity Release market.

The ability to deliver uninterrupted electricity to customers on demand and to withstand sudden disturbances such as short circuits or loss of major system components. This encompasses the reliability of the generation system and of the transmission and distribution system. Reliability may be(...)

Naturally, but flow-limited resources that can be replenished. They are virtually inexhaustible in duration but limited in the amount of energy that is available per unit of time. Some (such as geothermal and biomass) may be stock-limited in that stocks are depleted by use, but on a time scale(...)

Sales covering electrical energy supplied for residential, commercial, and industrial end-use purposes. Other small classes, such as agriculture and street lighting, also are included in this category.

Entities certified by the Federal Energy Regulatory Commission that act as a go-between with the Independent System Operator on behalf of generators, supply aggregators (wholesale marketers), retailers, and customers to schedule the distribution of electricity.

Refers to the duties a regulated public utility must perform for its customers. Service obligation includes the duty to serve all prospective customers, to provide adequate, reliable service and to render safe, efficient and nondiscriminatory service.

U.S. public utilities owned by shareholders, organized as corporations, and regulated by Federal Energy Regulatory Commission and state public utilities commissions. About three-quarters of all Americans receive electric service from shareholder-owned electric utilities.

Under the Public Utility Regulatory Policies Act (PURPA), a small power production facility (or small power producer) generates electricity using waste, renewable (water, wind and solar), or geothermal energy as a primary energy source. Fossil fuels can be used, but renewable resource must(...)

A single shipment of fuel or volumes of fuel, purchased for delivery within 1 year. Spot purchases are often made by a user to fulfill a certain portion of energy requirements, to meet unanticipated energy needs, or to take advantage of low-fuel prices.

Support service that is available as needed to supplement a consumer, a utility system, or to another utility if a schedule or an agreement authorizes the transaction. The service is not regularly used.

Benefits associated with regulated retail electric service, which may be at risk under open market retail competition. Examples are conservation programs, fuel diversity, reliability of supply, and tax revenues based on utility revenues.

Facility equipment used to tie together two or more electric circuits through switches. The switches are selectively arranged to permit a circuit tombe disconnected, or to change the electric connection between the circuits.

The movement or transfer of electric energy over an interconnected group of lines and associated equipment between points of supply and points at which it is transformed for delivery to consumers, or is delivered to other electric systems. Transmission is considered to end when the energy is(...)

An interconnected group of electric transmission lines and associated equipment for moving or transferring electric energy in bulk between points of supply and points at which it is transformed for delivery over the distribution system lines to consumers, or is delivered to other electric systems.

This is a regulated entity, which owns, and may construct and maintain, wires used to transmit wholesale power. It may or may not handle the power dispatch and coordination functions. It is regulated to provide non-discriminatory connections, comparable service, and cost recovery. According to(...)

Moving natural gas through pipelines from one place to another. Separating Electric or natural gas utility service into its basic components (such as electric generation, transmission and local distribution; and natural gas production, pipeline transportation and local distribution) and(...)

A device that provides a constant regulated voltage output in spite of interruptions of the normal power supply. It includes filtering circuits and is usually used to feed computers or related equipment which would otherwise shutdown on brief power interruptions.

An arrangement whereby the same company owns all the different aspects of making, selling, and delivering a product or service. In the electric industry, it refers to the historically common arrangement whereby a utility would own its own generating plants, transmission system, and(...)

A unit of apparent power equal to the mathematical product of a circuit voltage and amperes. Here, apparent power is in contrast to real power. On ac systems the voltage and current will not be in phase if reactive power is being transmitted.

A system whereby a distributor of power would have the option to buy its power from a variety of power producers, and the power producers would be able to compete to sell their power to a variety of distribution companies.

Any entity that purchases electricity at the wholesale level, including municipal utilities, private utilities, rural electric cooperatives or government-owned utility districts. Wholesale customers purchase electricity from other wholesale suppliers to resell to their own retail customers.

The purchase and sale of electricity from generators to resellers (who sell to retail customers), along with the ancillary services needed to maintain reliability and power quality at the transmission level.

The process of sending electricity from one utility to another wholesale purchaser over the transmission lines of an intermediate utility. Under the U.S. Energy Policy Act of 1992, utilities must provide wholesale transmission wheeling services to any electric utility, federal power marketing(...)

Windmill of advanced aerodynamic design connected to an electricity generator and used in wind power installations. Wind turbines can be either large propeller-type rotors mounted on a tall tower or flexible metal strips fixed to a vertical axle at top and bottom.